Forcing beneficiaries to take drug tests under tough new welfare rules is potentially illegal, the Privacy Commissioner says.

In a submission to the Government's latest round of welfare reforms, commissioner Marie Shroff says making beneficiaries take pre-employment drug tests could violate their privacy.

It could also leave beneficiaries in a "catch-22" situation, caught between an unlawful drug test and the threat of losing their benefit, she said.

The Government's latest welfare reforms - contained in the Social Security (Benefit Categories and Work Focus) Amendment Bill - will create three new benefit categories with a greater focus on finding work.

The bill passed its first reading in September but has faced opposition at the select committee hearings, with some claiming it breaches human rights obligations.

As part of the reforms, all beneficiaries will be required from July this year to take pre-employment drug tests when requested by a prospective employer. Those who refuse to take the test, or repeatedly fail, will have their benefits cut or suspended.

At present, any beneficiary can decline to apply for a job requiring a drug test without facing penalties.

Shroff said in her submission that pre-employment drug testing was required by law only for safety-sensitive roles, such as people operating heavy machinery.

However, the new welfare regime would not require employers to demonstrate drug-testing was necessary, or even legal, she said. "Not all employers will comply with the law."

The new rules would allow the Government to use unlawful drug tests to cut people's benefits.

"Vulnerable beneficiaries will be faced with a catch-22. They are not likely to challenge the legality of a drug test, as refusing to give consent would leave them at risk of having their benefit cut."

The Human Rights Commission said in its submission that drug tests and sanctions had "human rights implications" and would be difficult to implement.

"Firstly, it is difficult to distinguish between drug dependency and recreational drug use . . . [and] it is often hard to show that a positive drug test equates with impairment."

Social Development Minister Paula Bennett said it would be the responsibility of employers, not the Government, to undertake drug testing.

Recreational drug use was already preventing thousands of New Zealanders from gaining employment and adding to the taxpayers' burden, she said. "It's not good for them, it's not fair on taxpayers."

Drug addicts or dependants would receive addiction support and retain their benefits.

The Human Rights Commission is also deeply critical of other proposed welfare changes that require beneficiaries to meet new "social obligations" or risk losing their benefits.

Under the changes, beneficiaries who are parents will be required to meet these "social obligations", which include enrolling their children in early childhood education and with a health provider, or risk having their benefits halved.

The commission said that, rather than helping children, the sanctions would impose additional hardship and poverty.

The Government has already red-flagged potential legal hurdles for its reforms. The Justice Ministry "urgently" wrote a legal opinion for the attorney-general six days before the latest bill passed its first reading.

In the opinion, the ministry said the reforms did not breach beneficiaries' human rights but, if they did, this would be outweighed by better outcomes for children. Both the Human Rights Commission and the Law Society disagreed.